Whistleblower, the issued stated by Zion in both MJ01 and MJ02 was low permeability, which means there is high restriction for oil to flow through the reservoir into the well bore. And, yes, fracking has been successful in addressing shale formations with low permeability.
The missing link to connect all the dots is information that Zion has not disclosed: what is the oil-in-place? With an attractive oil-in-place number and an estimate of how much could be recovered with fracking, say 30%, then we have a project (subject to regulatory approve, or course).
It would be standard practice in the industry for the oil exploration company to provide an oil-in-place number so that investors, the regulators, and the public all know what the potential is. But, Zion has operated contrary to standard practice on MJ02 by fund raising without stating what the opportunity is.
Its any ones guess what will happen next, but the best outcome would be for Zion to state something like:
1. There is X barrels of oil-in-place, but the reservoir permeability is low.
2. In order to address the permeability issue, the reservoir needs Y stimulation.
3. Zion's plan to obtain regulatory approval and raise funds for the stimulation is Z.
We speculate that the reservoir needs to be fracked and that is not a bad assumption. But, it might need something else either due to the exact problem to be solved or environment concerns. Zion said they had tried to "stimulate" MJ02, but did not say what type of stimulation was performed. They also said a future stimulation would be necessary to produce MJ02, but they did not say what type. They did imply that the stimulation on MJ02 might be successful on MJ01, and hence the rational for reentry.
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